From the article: Google is earning enough from sponsored search to subsidize almost all of other businesses, including gmail, Google Office, Latitude, gDrive, and others.
I don't think Facebook is subsidizing other businesses with its profit. Actually it doesn't have any profit yet.
It will take years for the DOJ to be done with Google. Give Facebook some time!
I agree with Facebook board member Marc Andreesen's assessment: Facebook could be profitable and make over a billion in annual revenue whenever they choose. Instead, they're forgoing that for bigger riches -- and even more entrenched market power -- down the road. Facebook understands the game they're playing.
Facebook users face higher switching costs than Google search users. And individual features in Facebook -- photo sharing, status streams, comment threads, group utilities, invitations/RSVPs, instant-messaging, etc. -- already compete against multiple other companies.
When Facebook turns on their revenue spigot -- whatever it turns out to be -- they will look a lot like Google, in the same ways the article highlights. They will be subsidizing a bunch of free services, to the detriment of potential competitors, to defend their master proprietary asset -- the social graph plus a critical mass of users -- and the massive revenue that flows from it.
I'm curious, do you know when Andreessen said that? Because two years ago I would've believed it, but now I just don't buy it.
Beacon was supposed to be their adsense and look how that turned out. I don't doubt facebook's potential, but I do doubt that there's a switch that they're just waiting for some magic user count to flip.
According to Alexa, Yahoo gets a little less than twice Facebook's traffic. Yahoo's revenue for 2008 was $7.22B. So yeah, $1B+ for Facebook from conventional ads is probably reasonable.
